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Tax Case - Human rights do not apply to tax

19 September 2001
Issue: 3825 / Categories:

Signor Ferrazzini and another taxpayer transferred land, property and money to a limited liability company, of which Signor Ferrazzini owned most of the share capital and was the representative. The company applied to the Italian tax authorities for a reduction in the applicable tax rates payable on the transfer, and paid the amount it believed to be due. This resulted in 1987 in three supplementary assessments being served on Signor Ferrazzini on the grounds that the company was not eligible for the reduced rate of tax.

Signor Ferrazzini and another taxpayer transferred land, property and money to a limited liability company, of which Signor Ferrazzini owned most of the share capital and was the representative. The company applied to the Italian tax authorities for a reduction in the applicable tax rates payable on the transfer, and paid the amount it believed to be due. This resulted in 1987 in three supplementary assessments being served on Signor Ferrazzini on the grounds that the company was not eligible for the reduced rate of tax. In 1988 Signor Ferrazzini applied to have the supplementary assessments set aside. One case was struck out in 1998, and the other two applications were dismissed in 1999.

In February 1998, Signor Ferrazzini lodged an application with the European Convention of Human Rights contending that the length of the proceedings had exceeded a reasonable time contrary to Article 6(1) of the Convention for the Protection of Fundamental Rights and Freedoms 1950. This article provides that in the determination of a person's civil rights and obligations, everyone was entitled to a hearing within a reasonable length of time by a tribunal. Signor Ferrazzini said that the financial interests at stake amounted to civil rights and obligations. The Italian government argued that an individual's tax obligation towards the state belonged exclusively to the realm of public law.

The European Convention of Human Rights said that the state's increasing intervention in an individual's life required the court to consider features of public and private law before concluding that an asserted right could be classified as 'civil'. Rights and obligations existing for an individual were not necessarily civil in nature. When the convention was adopted, developments in the tax field which had occurred in democratic societies had not entailed a further intervention by the state into the civil sphere of the individual's life. The convention and its protocols had to be interpreted as a whole, and Article 1 of Protocol 1 in order to ensure the payment of taxes. Accordingly, tax disputes fell outside the scope of civil rights and obligations despite any pecuniary effects they produced for the taxpayer.

(Ferrazzini v Italy (App no 44759/98), European Convention of Human Rights, 12 July 2001.)

Issue: 3825 / Categories:
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